Videx Wire Products (Pty) Ltd v Competition Commission of South Africa

• Jurisdiction: South Africa
• Judge: Davis JP, Molemela AJA and Rogers AJA
• Judgment Date: 14 March 2014
• Docket Number: 124/CACOct12
• Court: Competition Appeal Court
• Hearing Date: 13 September 2013
• Citation: 2014 JDR 0479 (CAC)

Videx Wire Products (Pty) Ltd v Competition Commission of South Africa
2014 JDR 0479 (CAC)

2014 JDR 0479 p1

Citation	2014 JDR 0479 (CAC)
Court	Competition Appeal Court
Case no	124/CACOct12
Judge	Davis JP, Molemela AJA and Rogers AJA
Heard	September 13, 2013
Judgment	March 14, 2014
Appellant/; Plaintiff	Videx Wire Products (Pty) Ltd
Respondent/; Defendant	Competition Commission of South Africa

Summary

Competition — Unlawful competition — Cartel conduct — Limitations on bringing action — Individual prohibited actions forming part of overarching agreement not time-barred — Competition Act 89 of 1998, s 67.

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Judgment

THE COURT:

Introduction

[1]

On 26 January 2009 the respondent in this appeal ('the Commission') initiated a complaint in which it alleged that four firms in the market for the supply of mining roof bolts participated in a cartel over the period at least June 2004 to June 2008. The four firms named in the initiation document were RSC Ekusasa (Pty) Ltd ('RSC') (at all material times a Murray & Roberts company), Aveng (Africa) Ltd t/a Duraset ('Duraset'), Dwidag-Systems International (Pty) Ltd ('DSI') and the appellant Videx Wire Products (Pty) Ltd ('Videx'). By the time the complaint was initiated, corporate leniency had been granted to RSC.

[2]

On 30 September 2010 the Commission referred the complaint to the Tribunal, citing the four firms as respondents. RSC was the first respondent. By then Duraset, which was cited as the second respondent, had reached a settlement with the Commission and the settlement had been made an award of the Tribunal. In terms of that settlement Duraset agreed to pay an administrative penalty of R12,9 million, being 5% of its total annual turnover for its 2008 financial year. DSI and Videx were the third and fourth respondents. In its referral affidavit the Commission alleged that the cartel involved [a] the allocation of customers and maintaining of market shares and [b] collusive tendering in a number of specified instances in the period 2004 to 2006. (DSI claimed that in some instances the relevant firm which participated in interactions with the other firms was not itself but an associated BEE company, DSI-Mandirk Strate Support (Pty) Ltd. For purposes of the present appeal it is unnecessary to make any distinction.)

[3]

The Tribunal heard evidence over several weeks in October 2011 and January 2012. Witness statements were filed in advance of the hearing. The witnesses for the Commission were executives or former executives of RSC and Duraset. These witnesses, in the order they testified, were: [a] Mr Allen Koszewski: He was previously employed as the general manager of RSC. By the time he testified, the business in which he was employed had been sold by the controlling shareholder, Murray & Roberts, to the Barnes group. Koszewski then became the general manager of BRC Mesh. [b] Mr Neville Henderson: Over the period 2002 to 2008 he worked for RSC, most recently as its sales and marketing manager. He left

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The Court

RSC in August 2008 and joined Duraset. He retired from Duraset in February 2010. [c] Mr Hannes Bornman: He was employed by Duraset over the period 2000 to 2009 and was its marketing director as from 2003. He was no longer employed by Duraset or any of the firms by the time he gave evidence. [d] Mr Martin Cawood: From October 2003 to mid-2007 he worked for RSC, being promoted to the position of regional sales manager and then sales manager, responsible for the sale of components used in hard rock mining. Like Koszewski, his employment was transferred to the BRC Mesh in 2007. He rejoined RSC for a brief period in September 2010. By the time he testified he was employed by an unrelated entity, New Concept Mining.

[4]

DSI called two witnesses, Nigel Henson and Lukas van der Merwe. Henson was DSI's managing director. Van der Merwe had previously worked for RSC (until November 2010) but by the time he testified was an employee of DSI. Videx called, as its only witness, Mr Leon le Roux who was its manufacturing director and had been employed by Videx since August 1997.

[5]

The various witnesses confirmed their witness statements (subject to certain corrections noted at the beginning of their evidence), were led on certain aspects and cross-examined at the discretion of opposing counsel.

[6]

In argument before the Tribunal the Commission's counsel submitted that there had been an overarching cartel agreement during the period 2004 to 2007 and that certain specific instances of collusive tendering were merely the implementation of this overarching agreement (the Commission's counsel in their submissions to us used the expression 'single conspiracy' but we shall refer to it as the alleged overarching agreement). The specific instances which received attention in the referral affidavit, witness statements and oral evidence were; [a] a reverse auction conducted via the internet in June 2004 by a large platinum mining customer, Amplats; [b] a reverse auction conducted via the internet in October 2004 by a large gold mining customer, Goldfields; [c] a second reverse auction conducted via the internet by Amplats in May 2005; [d] a tender issued by Xstrata in mid-2005; [e] a tender issued by a large gold mining customer, Harmony, in October 2005; [f] a tender issued by a large coal mining customer, Anglo Coal, in the first half of 2006.

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The Court

[7]

The question whether there was an overarching agreement was important because DSI and Videx, who claimed that these incidents were isolated ad hoc acts of collusion, contended that the complaints in respect of the collusion concerning Amplats (in 2004 and 2005), Goldfields and Harmony were time-barred by s 67(1) of the Competition Act 89 of 1998 ('the Act'). That section provides that 'a complaint in respect of a prohibited practice may not be initiated more than three years after the practice has ceased'. The initiation, as already mentioned, occurred on 26 January 2009, meaning that a prohibited practice which had 'ceased' prior to 26 January 2006 ('the cut-off date') could not validly be the subject of the complaint. Videx denied its involvement in the Xstrata collusion (which, viewing that incident in isolation, was correct). In regard to the Anglo Coal incident, which was also said to be an ad hoc occurrence, DSI and Videx contended that the incident as alleged in the referral affidavit implicated only RSC and Duraset; that the Commission was not entitled at the end of the hearing to seek a finding against DSI and Videx in respect of that incident based on the oral evidence (which indeed implicated Videx and DSI); and that in any event the evidence did not show that they were parties to any agreement reached at the relevant meeting, even if their representatives were present.

[8]

In response to the position adopted by DSI and Videx in relation to the Anglo Coal incident, the Commission applied, after the completion of argument, for an amendment of the referral. This was opposed by DSI and Videx. No oral argument concerning the amendment application was heard.

[9]

The Tribunal delivered its decision and reasons on 19 September 2012. The Tribunal held that no overarching agreement had been established. It found that the complaints in respect of the 2004 Amplats auction, the Goldfields auction, the Xstrata tender and the Harmony tender (which were not contested by DSI and Videx on their merits) were time-barred. The Tribunal held that the complaint in respect of the 2005 Amplats auction was not time-barred because the prohibited practice had ongoing effects which were not shown to have ceased by the cut-off date. In regard to the Anglo Coal tender, the Tribunal dismissed the Commission's belated amendment application. Notwithstanding such dismissal, the Tribunal considered whether it should nevertheless adjudicate that complaint, having regard to the

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The Court

guidance afforded by the judgment of the Constitutional Court in Competition Commission v Senwes Ltd [2012] ZACC 6; 2012 (2) BCLR 667 (CC). The Tribunal concluded that it should not do so. This was not because DSI and Videx had not had a fair opportunity to deal with the matter in evidence but because the Tribunal considered that, based upon the evidence presented, the case was not sufficiently consistent and coherent. The Tribunal thus found a single contravention by DSI and Videx, namely the 2005 Amplats incident. This was held to be a contravention of s 4(1)(b)(iii) of the Act covering a period of one year from 2005 to 2006. Administrative penalties of R1 848 301 and R4 765 502 were imposed on DSI and Videx respectively.

[10]

Videx (but not DSI) appealed to this court against the Tribunal's decision, contending that the Tribunal had erred in finding that the 2005 Amplats complaint was not time-barred and had erred in any event in its computation of the administrative penalty. The Commission cross-appealed, contending that the Tribunal should have found that there was an overarching agreement and thus that none of the incidents in 2004 and 2005 were time-barred, and had erred in refusing the amendment application and in declining to adjudicate the Anglo Coal incident. The Commission's conduct in pursuing the cross-appeal only against Videx (and not also DSI) strikes us, regrettable as it is to so say, as unprincipled, because there would appear to be no material distinction between the position of Videx and DSI in that regard. However, as a matter of procedure the Commission is not precluded from following its course, though, if the cross-appeal succeeds, our finding would be binding only as against Videx.

[11]

It is convenient here briefly to elaborate on the significance of the question whether there...